Oregon Adopts Temporary Administrative Order Regarding Mortgage Servicer Licensing

The Mortgage Loan Servicer Practices Act necessitates that Oregon mortgage servicers attain a license from the Department of Consumer and Business Services (DCBS) by January 1, 2018. In order to provide time for the application process, a temporary rule has been adopted to create a licensing program in advance of the January 1, 2018 compliance date. DCBS did not have the authority to begin the rulemaking process until recently so there was not sufficient time to complete the notice and comment procedures required under the Administrative Procedures Act for a permanent rule. This temporary rule adopted by Oregon sets application requirements for obtaining a license, requirements for corporate surety bonds and irrevocable letters of credit, and application and renewal fees. The rule also clarifies which entities are exempt from licensing.

OAR 441-890-0005 sets application requirements for a mortgage servicer license. Each person applying for a mortgage servicer license must submit all of the following required application materials and information:

  • A completed Form MU1
  • A completed Form MU2
  • Fingerprints and an authorization to conduct a criminal records check and obtain a credit report
  • A corporate surety bond or an irrevocable letter of credit calculated using the appropriate loan servicing volume amounts under OAR 441-890-0025
  • Financial statements prepared in accordance with generally accepted accounting principles, including a balance sheet and a statement of income or operations, dated not more than six months prior to submission of the application
  • A statement with a detailed breakdown of the portfolio of mortgage loan servicing rights on a nationwide basis, as well as separately for Oregon.
  • The names and contact information of all subcontractors performing servicing activities on behalf of the mortgage servicer.
  • Biographical information required by OAR 441-890-0010
  • The information required under OAR 441-890-0020 for each branch office (Form MU3)
  • Payment of fees for application or renewal under OAR 441-890-0030.

OAR 441-890-0050 exempts certain entities from the licensing requirements. A person does not need to obtain a mortgage servicer license if:

  • He or she is an employee of a licensed mortgage servicer or an exempt entity acting within the scope of the person’s employment;
  • He or she owns the rights to service a mortgage loan but does not otherwise service a residential mortgage loan;
  • The entity is a nonprofit organization that:
    • Has been granted a tax-exempt status under section 501(c)(3) of the Internal Revenue Code of 1986, 26 U.S.C. § 501(c)(3);
    • Promotes affordable housing, affordable housing financing, or other similar services approved by the Director; and
    • Has not violated a state or federal law and has not engaged in a course of dealing that is fraudulent, deceptive, or dishonest.

The effective period of the temporary administrative order is October 23, 2017 through April 17, 2018 and the full text can be found here: Full Text

 

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Robert Harrison, JD, is a regulatory compliance consultant with Bankers Advisory. He is a graduate of Boston University and earned his juris doctor at the Boston University School of Law. Robert is admitted to the Bar in Massachusetts.

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